In a statement released last night Smith admitted that in-fighting at the club left him with little choice but to step down, while urging Gers fans to support proposed boardroom resolutions and long-suffering manager Ally McCoist.
His statement read: "It is with the greatest of regret that I have to announce to Rangers supporters that I have decided to step down as chairman of Rangers Football Club. It is, I am convinced the correct thing to do under the circumstances.
"Unfortunately, recent events have led me to the conclusion that the only option left open is for me to submit my resignation and to leave the board of directors with immediate effect. Working with a board which could rarely find consensus and agreement has created a highly-dysfunctional environment which has not been good for the club.
"On top of that, there has been recent further disruption which again has rendered the board less effective and efficient than it ought to have been. It is clear that boardroom change is required and I would urge Rangers fans to get fully behind the resolutions which last week were presented to the board and shareholders. Stepping away from this club is heart breaking but I will always be grateful for the support Rangers fans have given me down through the years."
Three separate Rangers supporters groups released their own joint statement last night following Smith's exit, expressing "extreme concern" over the turmoil at Ibrox and requesting an urgent meeting with chief executive Craig Mather.